Kaiser Permanente has started discussions to acquire a major PPO in the Kansas City, Mo., area. Preferred Health Professionals, a not-for-profit plan now owned by local hospitals and doctors, would become part of Kaiser's product offering in Kansas and Missouri.
This is the giant HMO's first venture into the PPO model. The announcement came just a few days after Kaiser revealed it is negotiating to buy Humana Group Health Plan in the Washington, D.C., area. Both purchases derive from Kaiser's wish to introduce more flexibility and responsiveness into its product offerings on a market-by-market basis.
Preferred Health is a single-product shop, and its provider owners thought they needed a broader product mix to survive long term. Kaiser responded to a request for proposals and was selected as exclusive bidder. Preferred Health is profitable, as was the Kaiser closed-panel HMO in Kansas City last year for the first time.
The PPO covers 95,000 people and includes 73 hospitals and 3,940 physicians. The local Kaiser plan has 52,000 enrollees, a significant increase from a year earlier.
Preferred Health would remain a separate organization under the Kaiser banner. For the past two years, Kaiser's Kansas City Region has been directed from Denver. If the purchase goes through, Kaiser will establish a vice president for operations to oversee both products from Kansas City.
After due diligence and approval by doctors, hospitals and regulators, both parties hope to complete the acquisition in early 1997.